So as we reported yesterday, longtime AIG CEO Hank Greenberg went before Congress and placed the blame for the firm’s collapse squarely on the execs who took over after he left in 2005 — including on the crew currently at the helm, who Greeenberg said should be replaced.
But we’ve been struck by the ferocity of AIG’s response to Greenberg, who’s been skirmishing with the firm pretty much since he stepped down. Despite its awkward position as a ward of the state — not to mention as the prime corporate face of the greed and recklessness that caused the financial crisis — AIG has mounted an aggressive public-relations counter-offensive.
AIG spokesman Mark Herr told the Associated Press: “Mr. Greenberg is again trying to re-write history in order to distance himself from the Financial Products group he personally created and oversaw. The fact is that, under his watch, guaranteed compensation arrangements for (Financial Products group) employees were put in place.”
And AIG put out a statement saying:
Hank Greenberg continues to deny his role in allowing Financial Products to write the multi-sector credit default swaps which sowed the seeds for AIG’s troubles.
[Greenberg] refuses to acknowledge that he approved entry into the credit default swap business, approved more than $40 billion of swaps written on (debt obligations) containing sub-prime loans, and didn’t hedge or put up reserves against them.
The claim that he could have hedged the entire book, or forced counter-parties to renegotiate collateral provisions, is not grounded in reality. It is also at odds with the fact that under his tenure none of these trades was ever hedged.
And in a press release that accompained a four-page dossier attacking Greenberg, put out preemptively the night before Greenberg’s testimony, AIG
Given that Hank Greenberg led AIG into the credit default swap business, has repeatedly refused to testify under oath about a transaction he initiated when he was still AIG’s CEO, and is being investigated by the SEC and the Justice Department, we don’t understand how he can be viewed as having any credibility on any AIG issue.
According to Pro Publica, the dossier was entitled “The Greenberg Legacy.” The news site reports:
The first section includes 11 bullet points that recap history of the Financial Products division and Greenberg’s role in originating it. Greenberg has tried to distance himself from the unit, which lost billions selling a form of insurance on toxic mortgage securities.
The next section deals with “Mr. Greenberg’s Ouster.” It recounts Greenberg’s decision to “take the Fifth” when confronted by questions from investigators examining securities fraud by the company.
And in a Washington Post op-ed last month, current CEO Ed Liddy sounded a similar theme:
Mistakes were made at AIG, and on a scale that few could have imagined possible. The most egregious of those began in 1987, when the company strayed from its core insurance competencies to launch a credit-default-swaps portfolio, which eventually became subject to massive collateral calls that created a liquidity crisis for AIG.
Indeed, the pushback has so been so aggressive that it brings to mind the news from last month that the toppled insurance giant has four PR firms on its payroll. And two of those firms, Hill & Knowlton, and Mark Penn’s Burson-Marsteller, are high-priced experts at shaping Washington opinion.
Penn has written that his firm’s work for AIG “is all about helping this company handle the massive volume of media, government and employee interest in their situation.”
But Dick Grove, a veteran PR man who has worked with both Burson-Marsteller and Hill & Knowlton, told TPMmuckraker that AIG is likely paying a pretty penny for those services. Based on his experience doing such work, said Grove, “you’re gonna have a whole lot of meetings,” for which the spin-meisters would charge hourly fees, “like a taxi meter going berserk.”
Grove said he thinks AIG’s willingness to spend big bucks on shaping its image in Washington is misguided — especially since it’s taxpayer money. Instead, given the current environment, it should simply make itself available to the media and answer questions as openly and honestly as possible.
It’s also worth noting that AIG’s line of attack has dovetailed with that of committee Republicans. The day before AIG put out its statement attacking Greenberg’s credibility and pointing out that he’s under federal investigation, Rep. Darrell Issa, the committee’s ranking GOPer, sent a letter to committee chair Ed Towns, obtained by TPMmuckraker, that likewise noted the federal investigations and expressed “concern about the credibility of our witness.”
Curiouser and curiouser…